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Semiconductor Market Commentary, Thru Project Mascot
Intel's high-NA lead and derisked stitching give its foundry technical reasons for much better returns. Per Intel, high-NA is used on selected layers of a subset of Core Ultra Series 3 processors; 18A D0 is already within high-volume manufacturing range. Stitching has been substantially derisked on XT260 and could be ready for volume production in 2027 at the earliest. The foundry turnaround remains a minority bet, and packaging was an added benefit to the high-NA case. x.com
Intel's foundry and packaging demand is looking more concrete through new prospective customer programs. Per KeyBanc, supply-chain feedback indicates Intel has effectively secured foundry commitments from Broadcom for a networking switch and Google for a server CPU; Qualcomm's AI300 is expected to use EMIB-T. The 14A PDK is coming soon, and doubts about its readiness and SerDes should not deter buyers. Now is the time to own Intel. x.com x.com x.com
Intel's poor EMIB-T packaging yields threaten its plans for next year. Per a confidential source, yields are very poor, and EMIB-T may now slip into the following year. The 14A PDK 0.9 matters more for the long term. Intel remains a very strong long-term bull case because yields should improve, though setbacks can arise along the way; whether to avoid this near-term risk is a personal judgment. x.com x.com x.com x.com x.com x.com
Intel got to the next wave of chipmaking tools first: High-NA EUV reached its first high-volume production on Intel 18A. ASML's numbers point to a capacity supercycle, probably not a peak, with EUV and DUV capacity each growing about 30% a year for the next two years. That matters because ASML only expands capacity against committed demand, so the whole lithography stack is supply-constrained and building. x.com
Intel looks priced for too much good news before it has actually delivered on anything. Its CPU story was carrying the share price. x.com
Intel's growing server profit gives its recovery firmer support, though Q4's margin reset limits extrapolation. Data Center and AI revenue rose 78% to $7.3B; foundry losses narrowed to $1.85B but remain substantial. Management guides Q4 non-GAAP gross margin to 38% from 44.1% in Q3, while client sales fell 5%. The 14A milestone alone does not establish external foundry commitments. x.com
Intel is scaling its foundry turnaround with 18A in high-volume production and yields ahead of plan. Q2 revenue rose 25% to $16.1B, with Panther Lake on 18A. 14A risk production is set for the second half of 2027 and high-volume ramps for 2028, and two prospective 14A customers will decide between the second half of 2026 and the first half of 2027. Capex tops $20B this year and rises sharply in 2027. Nvidia invested $5B and is co-developing custom x86 CPUs; the US government holds 9.9%. x.com
Intel's high valuation is hard to justify while its foundry turnaround remains unproven. At about 59x forward earnings, nearly three times TSMC's 19x, Intel has slower projected revenue growth; its foundry lost $2.09 billion in Q2 2026, while TSMC's Q3 operating margin was 58.7%. A politician's stock purchase alone does not make Intel a buy. x.com x.com
US sovereign AI and defense demand for domestically made compute will bring Intel most, if not all, US semiconductor designers as customers. PC weakness also lets Intel shift wafers to higher-margin server CPUs, but that takes a few quarters; capacity to ship more server CPUs is the limiter. The $240 billion 2030 server CPU market forecast is a stretch case, not the base case, versus roughly $200 billion consensus. x.com x.com x.com x.com x.com
Intel's foundry may be closer than the market assumes because its UMC 12nm partnership brings external-customer experience and a more customer-friendly design kit. Musk said Terafab plans to use Intel 14A, with Tesla and SpaceX building and running the fabs themselves; that would be an important outside test. Intel still must prove yields, volume and schedules, while Terafab's commercial terms remain unclear. Still bullish, but not enough to add now. x.com
Intel's lack of real AI or foundry plans is showing in weak Q4 guidance. It forecasts $15 billion to $16 billion of revenue versus $17.08 billion consensus and non-GAAP EPS of $0.25 versus $0.44, despite Q3 EPS of $0.52 and revenue of $16.51 billion beating expectations. x.com
Intel's production was reportedly affected by a pause at its Israel fabs, which should benefit competitors Arm and AMD. Both look good on that basis. x.com
